A recent report from the Center on Budget and Policy Priorities (CBPP) attempts to clear up some confusion about the average American's tax burden propagated by the Tax Foundation, a center-right tax policy joint.

Every year, the Tax Foundation announces "Tax Freedom Day" (TFD), their trademarked (I'm not kidding) date when Americans have "earned enough money to pay this year's tax obligations at the federal, state, and local levels." Interestingly enough, TFD occurred just six days ago, on April 9. The problem is that the Tax Foundation's calculations are exceptionally flawed.

According to CBPP, two flaws hinder the Tax Foundation's analysis. First, estimates of the average American's federal tax burden use total federal tax receipts divided by total national income, which skews the average towards high earners. In essence, the analysis makes middle- and lower-class people think they pay a larger share of their income to the federal government than they really do.

Second, because estimates of state and local tax burdens rely heavily on individuals' federal tax burdens, state and local estimates substantially exaggerate the tax burdens of middle-class families as well. The analysis also attempts to place the ultimate burden of state corporate, severance, and tourism taxes on the consumers of a business' product. As CBPP points out, it makes little sense to saddle Maine with a higher tax burden because the state's residents buy oil from a company in Alaska.

In the end, TFD misrepresents "the tax bills faced by typical middle-income workers" to journalists, policymakers, and the public at large. And the Tax Foundation makes no effort to correct its yearly analysis when the government releases data later that proves the calculations wrong.

On a deeper level, the character and tone of the report that accompanies the announcement of TFD misleads the public about taxes in general. TFD pits individuals against government, calculating the days an individual works to pay off their share of debt to the state, and the days they work for "themselves." The implication being that Americans derive no benefit from the taxes they pay.

Of course, that’s not the case. As CBPP rightly points out, government revenues are used for everything from building and maintaining "the roads and bridges that families use every day," to funding "the educational system, justice system, and other basic infrastructure, without which many Americans would not be able to earn the incomes they do."

Image by Flickr user johnsolid used under a Creative Commons license.